China's top diplomat wants free-trade deal with Europe

Beijing's top diplomat called for China and the European Union to consider a multi-billion-dollar free-trade deal, a once unthinkable step that shows a big improvement in relations between two of the world's largest markets.

Yang said both sides should "work jointly to create conditions for launching a feasibility study of a China-EU free-trade agreement."

British Prime Minister David Cameron told officials in China in December he was a strong advocate of such a free-trade deal.

But the European Commission, which handles international trade negotiations on behalf of EU countries, has said there must first be progress on an "investment agreement" to make it easier for European countries to do business in China.

Talks on that formally began in Beijing last week, a big step that many see as a potential forerunner to a free-trade deal.

European companies complain of poor treatment in China, such as being forced to share sensitive know-how to win access to Chinese funding and local contracts.

Trade between Europe and China has doubled since 2003 to more than 1 billion euros ($1.3 billion) a day, but China receives just 2 percent of the EU's investment abroad.

Talk of a free-trade deal, which would create a market of almost 2 billion people, seemed unthinkable just a year ago, when Brussels prepared to levy punitive import duties on billions of dollars of Chinese solar panels, setting off the biggest ever trade dispute between the two partners.

A deal to set a minimum price for the solar panels defused the tensions.